Cognis counts on cost savings to counteract sales drop

By Caroline Scott-Thomas

- Last updated on GMT

Related tags Investment Cognis

Cost savings initiatives have helped offset steeply declining sales for nutritional and personal care ingredients company Cognis during the first three quarters of 2009, the company said on Wednesday.

Cognis has reported a drop in sales of 11.8 percent compared to the first three quarters of 2009 with particularly large declines in Europe, which it attributed to the economic downturn.

The company’s sales for its nutrition and health sector decreased by 6.8 percent to €247m during the first nine months of the year, but overall sales figures were pulled down even further by particularly poor performance in its care chemical ingredients business, which saw a drop of 14.3 percent, to €1,108m.

However, Cognis said that these lower volumes were counteracted by “effective cost management” ​and “a favorable product mix”​ which saw it return an operating result that was 2.1 percent up on the same period last year, of €270m. It claims that changes to its ingredient portfolio and investments in more sustainable products helped it to achieve particularly strong earnings growth in the third quarter of 15.7 percent on Q3 2008.

Cognis CEO Antonio Trius said that the company’s product portfolio has remained resilient even in the midst of 2009’s difficult economic environment. He pinpointed the company’s dual focus on wellness and sustainability as “one of the strongest drivers of success for all our businesses.”

“In addition the significant savings achieved through our global cost optimization program enabled us to improve our operating result,” ​he said. “Sales volumes are still relatively low, but they continue to move in an upward direction.”

Looking ahead, Trius said: “The economic situation has further stabilized and slightly improved over the last months, as global demand and businesses start to recover, although the situation remains volatile.”

Like many other companies over the past year, the Cognis Group has also been moving to increase its liquidity, and reduced its net debt by €386m over the past nine months, to €1,876m.

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